Australia: New Environmental Offsets Regime for Queensland

Introduction

The proposed new environmental offset regime for Queensland is
expected to commence shortly. The overarching framework for the new
offsets regime will be established by the Environmental Offsets
Act 2014 (EOA), which was assented to on 28
May 2014 but has not yet been proclaimed into force. The EOA aims
to simplify and streamline the assessment, approval and delivery of
environmental offsets in Queensland.

Earlier this year, we published an
article which examined the EOA by detailing the context in
which it was developed and highlighting its key features.

The purpose of this article is to provide an update on the
implementation of the new environmental offsets framework. In
particular, we examine two key supporting documents for the EOA
which have subsequently been released, specifically, the draft
Environmental Offsets Policy (Policy) and
the draft Environmental Offsets Regulation 2014
(Regulation). While the Regulation and the Policy
have only been released in draft form, they provide important
detail and insight about how the new environmental offsets regime
will operate in practice.

Environmental Offsets Regulation

The EOA defines an environmental offset to mean an activity
undertaken to counterbalance a significant residual impact of a
prescribed activity on a prescribed environmental matter.

These terms are discussed in our earlier article and the
Regulation sheds further light on what they mean. It also sets out
a number of important matters and processes for environmental
offsets.

Prescribed activities

Schedule 1 of the Regulation sets out a list of prescribed
activities. This includes, for example, a resource activity or
prescribed ERA under the Environmental Protection Act 1994
(Qld). Development for which an environmental offset may be
required under a local planning instrument (such as a planning
scheme) is also a prescribed activity.

It is important to note that the Regulation does not change the
prescribed activities for which environmental offsets are currently
required under the existing environmental offsets regime.

Prescribed environmental matters

Under the EOA, there are three categories of prescribed
environmental matters: namely, matters of national environmental
significance (MNES), state environmental
significance (MNES) or local environmental
significance (MLES). These matters are intended to
be prescribed under the Regulation.

There are currently no MNES listed under the Regulation.
However, if the Queensland offset framework is accredited by the
Commonwealth under the Environment Protection and Biodiversity
Conservation Act 2000 (Cth) (EPBC Act), it is
expected that MNES will be prescribed. An update on this
accreditation process is provided below.

The Regulation lists MSES in Schedule 2. This list comprises a
range of matters that are protected under State legislation,
including regulated vegetation, high preservation areas of wild
river areas, protected wildlife habitat and fish habitat areas.

In relation to some (but not all) MSES, exclusions apply where
the MSES is located in an urban area and a State agency is the
administering agency for the applicable prescribed activity. The
definition of 'urban area' is the same as the definition in
the Sustainable Planning Act 2009 (Qld)
(SPA).

A MLES is defined under the Regulation as a matter for which an
environmental offset is required under a local planning instrument.
This may include, for example, "koala bushland habitat"
(as defined under the Queensland State Planning Policy).

Reviewable decisions

The Regulation provides for a dispute resolution process in the
event that an authority holder wishes to review either of the
following decisions (called reviewable
decisions):

the decision to provide notice to the authority holder under
section 19(3) of the EOA that an offset condition should be
delivered in a way different to the way stated in the authority
holder's notice of election and any offset delivery plan;
or

the decision to refuse the authority holder's application
under section 18 or 19 of the EOA. This would include matters with
respect to a notice of election such as the type of offset proposed
(i.e. proponent-driven offset, financial settlement offset or a
combination of the two) and the delivery of the offset (e.g. offset
delivery plan).

The Regulation provides that every reviewable decision must
first be reviewed by way of an application for internal review. The
relevant administering agency then makes a decision to either
confirm or amend the reviewable decision or substitute another
decision for the reviewable decision.

An application for internal review does not of itself stay a
reviewable decision. In order to obtain a stay, the applicant must
apply to the relevant Court (e.g. Planning and Environment Court of
the Land Court) or administrative tribunal (Queensland Civil and
Administrative Tribunal (QCAT)) for a stay of the
reviewable decision using the process set out under section 12 of
the Regulation. The choice of Court or tribunal will depend upon
which legislation imposed the particular offset condition. For
example, for an environmental offset condition imposed under SPA,
an application for a stay is made to the Planning and Environment
Court. For an environmental offset condition imposed by the
Nature Conservation Act 1992 (NCA) or the
Marine Parks Act 2004, a stay application is made to
QCAT.

The process for an external review of a reviewable decision is
set out under section 13 of the Regulation. An applicant may apply
to the relevant Court or administrative tribunal for an external
review of a reviewable decision once it has been given an
information notice with respect to the internal review decision (as
discussed above).

Environmental Offsets Policy

It is proposed under the new environmental offsets regime to
replace the existing five separate environmental offset policies
with a single State offsets policy. It should be noted that the EOA
leaves the door open for the creation of further State and local
government offset policies. The EOA provides that an environmental
offsets policy can be prepared by the State government or a local
government. However, it will only become an offset policy under the
EOA if the document is prescribed by regulation. According to the
Explanatory Memorandum to the EOA, the rationale behind this is to
ensure that the State is able to ensure consistency and to avoid
the creation of multiple overlapping offset policies. To date, the
Policy is the only environmental offsets policy proposed to be
prescribed under the Regulation.

The Policy is designed to establish a simplified approach to
determining an offset obligation and provide flexibility in offset
delivery choices. It will be a statutory instrument and a
"decision-making support tool" for an administering
agency to "enable consistent decision making" for
environmental offsets under the EOA. The Policy will also be
accompanied by various supporting materials (for example, the
Financial Settlement Offset Calculation Methodology
(Methodology)) that will provide advice on how to
meet requirements of the Policy.

Offset requirements under the Policy will be divided into two
Chapters, specifically:

Chapter 2 - offsets for impacts on prescribed environmental
matters other than protected areas (that is, most protected areas
under the NCA, such as a national park or a nature refuge);
and

Chapter 3 - offsets for impacts within protected areas.

Where a prescribed activity will have an impact on a prescribed
environmental matter within a protected area, the
requirements of both Chapters will be relevant (for example, an
impact on an endangered species located in a national park).
Therefore, any offsets required under Chapter 3 will be in addition
to those required under Chapter 2.

As noted in our previous article, environmental offsets can be
delivered using a proponent driven offset, a financial settlement
offset or a combination of the two.

The Policy provides that the size and scale of the offset
required can be identified using the offset area calculator on the
Department of Environment and Heritage Protection
(EHP) website. This calculator can be applied
through one of two approaches to identify the offset area based on
the area of impact, namely:

a rapid assessment which uses predetermined factors loaded onto
the calculator (which will always apply if meeting the offset
obligation through financial settlement); or

providing alternative factor scores for the calculator based on
field assessment of the impact site and offset site.

The Policy provides the following standard payment formula for a
financial settlement offset:

Notably, this standard payment formula is subject to a maximum
capped ratio of offsets to impacts of four-to-one. It is also worth
noting that the Methodology contains variations to the standard
formula for South East Queensland koala habitats, protected areas
and marine and aquatic matters.

In terms of a proponent driven offset, the Policy provides
detail about the requirements for a proposed offset delivery plan
(as required under section 18 of the EOA).

The Policy will allow for the possibility of a staged offset
delivery approach whereby the authority holder notifies the
administering agency of the intended offset delivery approach for
each stage before the prescribed activity for that stage commences.
If an applicant seeks a staged offset delivery, it must be
identified before the relevant authority is issued to allow the
conditions of the authority to reflect the staged process.

The staged approach will enable offset credits from one stage to
be used for the same matters and/or financial settlement in a
subsequent stage. Similarly, it will also allow for an offset debit
to be created (in unavoidable circumstances) where there are
unforseen impacts on prescribed environmental matters.

The Policy identifies two specific "shelf-ready
products" in order to assist authority holders and offset
providers with the delivery of offsets. These are:

Direct Benefit Management Plans (DBMP), which
are packaged investments that provide a range of actions to benefit
prescribed environmental matters. This includes options to improve
knowledge, understanding and management of certain prescribed
environmental matters in order to achieve improved conservation
outcomes. Further detail about DBMPs is included in Appendix 3 of
the Policy. Notably, the Policy specifies that DBMPs are not
suitable for offsetting impacts on koala habitat in South East
Queensland; and

Strategic Offset Investment Corridors, which identify areas
where land may be suitable for management activities that provide a
benefit to areas likely to be impacted by development. The purpose
of the corridors is to connect conservation hubs (for example,
national parks) in corridor areas that are under low development
pressure. An overview map of the first Strategic Offset Investment
Corridor (which is situated in the Galilee Basin area) is available
on the
EHP website.

It is a requirement of the EOA that an environmental offset is
capable of delivering a conservation outcome for the impacted
matter. The EOA states that a conservation outcome is achieved in
the offset is selected, designed and managed to maintain the
viability of the particular prescribed environmental matter
(section 11). In other words the Policy states that, the offset
must maintain the viability of the matter relative to the status
quo (i.e. the situation that would have existed if the development
and the offset had not occurred).

The Policy provides some guidance in relation to what an offset
must achieve in order to fulfil this standard. This can be achieved
by, for example, including no more than 10% of the offset as
research or education programs, being efficient, effective, timely,
transparent and scientifically robust, and providing tangible
benefits for the impacted matter as close as possible to the
impacted site (e.g. within the same local government area or
sub-region).

Offsets for protected areas

The Policy deals with protected areas (e.g. national parks or
nature reserves) in a different way. This is to take into account
the two-fold impact on the area, namely, loss of values that have
environmental significance and a loss of associated "public
benefit" values such as access, open space, tourism,
recreation and cultural pursuits.

The Policy provides that an offset would generally be required
for any activity that impacts a protected area unless:

the activity is conducted as part of a management action by the
administering agency consistent with the principles of the
protected area; or

the Chief Executive determines that the offset will be waived
or reduced or an alternative arrangement negotiated, noting that
any alternative arrangement must be equal to or better than the
agreed offset value.

The Policy specifies a ratio/multiplier to determine the quantum
of impact on a protected area which is aimed to be "directly
proportionate to the level of legislative protection" of the
relevant protected area and to take into account matters such as
lost public benefit values and likely cost of replacing the values.
For example, a national park is afforded a ratio of 10 whereas a
forest reserve has a ratio of 5. An offset payment is then
determined using the following formula:

Accreditation under the EPBC Act

As stated above, it is intended that Queensland's
environmental offsets framework be accredited under the EPBC
Act.

The Federal Government has released a draft bilateral agreement
with Queensland for public comment under the EPBC Act, the purpose
of which is to identify State authorisation processes that can be
accredited under the EPBC Act. This initiative forms part of the
Federal Government's broader 'one stop shop' policy,
aimed at reducing duplication of environmental assessment and
approval processes between the Commonwealth and the States and
Territories.

The draft approval bilateral agreement provides that the
Commonwealth and Queensland will 'work cooperatively towards
streamlining offsets under a single Queensland offsets policy'
that 'delivers an outcome equivalent to, or better than the
EPBC Act Environmental Offsets Policy' within 12 months of the
commencement of the agreement.

In the meantime, the draft agreement requires Queensland to
apply the EPBC Act Environmental Offsets Policy, including
application of the accompanying offset assessment guide where it
applies.

The only exception to this is where the relevant State decision
maker considers that a proposed offset is consistent with the EPBC
Act Environmental Offsets Policy but not necessarily with the
outcome indicated by the assessment guide because of the
'unique nature of the impact, of a proposed offset or of the
project overall. Such a proposed offset will only be permitted
where the Senior Officers' Committee (to be established by
administrative arrangements made under the agreement) advises the
Federal Environment Minister that the proposed offset would provide
an acceptable environmental outcome, which is consistent with the
objects of the EPBC Act. It is intended that this will only occur
in exceptional circumstances.

Next Steps

The EOA has passed through Parliament and was assented to on 28
May 2014. The new environmental offsets regime is expected to
commence in mid-2014 on a date to be fixed by proclamation.

The following documents are also in development but have not yet
been released:

Environmental Offsets Policy – general guideline;

Guideline to determining a 'significant residual
impact';

Habitat Quality Assessment guideline;

Offset Assessment Guide;

Self-administered offset code of compliance, which is intended
to apply to particular prescribed activities.

We will keep you updated in relation to these developments.

Norton Rose Fulbright has a market leading environmental
practice. Please contact Rebecca Hoare if you would like to know
more about the legislation and the implications for your
business.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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